Areva H1 net profit down 79 percent to euro161M

PARIS - French nuclear reactor builder Areva SA said its net profit slumped 79 percent in the first half of the year after it booked a fresh charge for delays in construction of a new-generation reactor in Finland.

France's state-owned nuclear engineering giant said net profit for the six months ending June 30 was euro161 million ($231 million), down from euro760 million a year earlier.

The world's largest builder of nuclear reactors booked a fresh euro550 million provision against its contract to build its latest generation EPR nuclear reactor for Finnish power company TVO.

In a statement, Areva blamed "inadequate resources deployed by TVO to fulfill their contractual commitments," which is said was leading to delays and additional costs.

The euro3 billion project has now accumulated euro2.3 billion in estimated losses, Areva said.

The 1,600-megawatt Olkiluoto 3 plant was initially expected to be online in 2009. The so-called European Pressurized Reactor is meant to eventually replace aging reactors whose designs date from decades ago.

Earlier this year Areva Chief Executive Anne Lauvergeon said there was "a good chance" a new deadline in 2012 would be met. In its statement Monday however, the company said the project's final cost and completion date remain uncertain.

The provision nearly wiped out Areva's operating first-half operating profit, which was left at euro16 million, down from euro539 million a year earlier.

Areva said it has made proposals for completing the project to TVO, and that it will only commence the final construction phases after TVO approves the changes.

In the statement Monday, Lauvergeon said Areva anticipates strong growth in orders and sales this year, and an operating profit "close to" the euro417 million it made last year.

In July the company abandoned its previously announced full-year guidance, "given the launch of several operations likely to affect its scope of activity and results."

The company put its power transmission and distribution division up for sale earlier this year, and expects to make a decision by the end of 2009.

The sale is part of a bid to raise cash to shore up Areva's balance sheet and fund future investments. Areva bought the division for about euro920 million in 2004 from French power provider Alstom.

Areva employs 75,000 people and is majority owned by the French state and France's Atomic Energy Commission. State-controlled Electricite de France also owns a 2.4 percent stake.

Areva competes with General Electric Co. of the United States; Westinghouse Electric Co., a subsidiary of Japan's Toshiba Corp.; and Russia's Atomstroyexport to design and build nuclear reactors. Areva says it has built 100 of the 303 light-water reactors in service worldwide, including all of France's 58 reactors.

Areva operates in all segments of the nuclear industry from uranium mining in Canada, Niger and Kazakhstan to enrichment at sites in southeast France. It also makes reactor fuel assemblies in France, Germany and the United States, and operates a nuclear fuel reprocessing plant in Normandy.

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